Out-of-pocket expense

Look up out-of-pocket in Wiktionary, the free dictionary.

An out-of-pocket expense (or out-of-pocket cost, OOP) is the direct payment of money that may or may not be later reimbursed from a third-party source.

For example, when operating a vehicle, gasoline, parking fees and tolls are considered out-of-pocket expenses for a trip. Car insurance, oil changes, and interest are not, since the outlay of cash covers expenses accrued over a longer period of time. The services rendered and other in-kind expenses are not considered out-of-pocket expenses; the same goes for depreciation of capital goods or depletion.

Organizations often reimburse out-of-pocket expenses incurred on their behalf, especially expenses incurred by employees on their employers' behalf. In the United States, out-of-pocket expenses for such things as charity, medical bills, and education may be deductions on US income taxes, according to IRS regulations.

To be out of pocket is to have expended personal resources, often unexpectedly or unfairly, at the end of some enterprise.